2000 (10) TMI 938 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the show cause notice issued under Section 18 of the Goa Sales Tax Act, 1964.
2. Whether the processed meat products sold by the petitioner qualify for tax exemption under Item No. 4 of the Second Schedule of the Sales Tax Act.
3. Jurisdiction and sufficiency of reasons for reopening the assessment.

Detailed Analysis:

1. Validity of the Show Cause Notice Issued Under Section 18 of the Goa Sales Tax Act, 1964:
The petitioner challenged the show cause notice dated June 2, 1992, issued by the Sales Tax Officer under Section 18 of the Sales Tax Act. The petitioner argued that the "reasons to believe" required for reopening an assessment were not met and that the notice was based on a mere change of opinion. The petitioner cited various Supreme Court decisions, including Calcutta Discount Co. Ltd. v. Income-tax Officer and Income-tax Officer, I Ward, District VI, Calcutta v. Lakhmani Mewal Das, to support the argument that the reopening of assessment requires new material facts or evidence that were not available during the original assessment.

The court, however, found that the Sales Tax Officer had valid grounds for reopening the assessment based on subsequent information provided by the petitioner and an audit note that highlighted potential omissions. The court held that the audit note constituted valid "information" under Section 18, allowing the Sales Tax Officer to reassess the turnover.

2. Whether the Processed Meat Products Sold by the Petitioner Qualify for Tax Exemption Under Item No. 4 of the Second Schedule of the Sales Tax Act:
The petitioner contended that their processed meat products, such as sausages, salami, and bacon, should be exempt from sales tax under Item No. 4 of the Second Schedule, which exempts "meat (except when sold in sealed metallic or plastic containers)." The petitioner argued that these products should still be considered "meat" and thus qualify for the exemption.

The court disagreed, noting that the processed meat products had undergone significant treatment and processing, including mixing with condiments, freezing, and packaging in polybags. The court emphasized that these processes altered the original character of the meat, making it a different commodity in common parlance. The court referred to the definition of "manufacture" under Section 2(f) of the Sales Tax Act, which includes any process of treating or adapting goods. The court concluded that the processed meat products did not qualify for the exemption as they were no longer "meat" in its natural form.

3. Jurisdiction and Sufficiency of Reasons for Reopening the Assessment:
The petitioner argued that the reopening of the assessment was based on a change of opinion rather than new material facts. The court found that the Sales Tax Officer had acted within jurisdiction by reopening the assessment based on new information provided by the petitioner and the audit note. The court held that the audit note, which pointed out potential omissions in the assessment, constituted valid "information" under Section 18, allowing the Sales Tax Officer to reassess the turnover.

The court also addressed the petitioner's argument that the assessment could only be revised by the Commissioner under Section 27 of the Act. The court found that the Sales Tax Officer had the authority to issue the show cause notice under Section 18 and that the notice was validly issued based on sufficient reasons.

Conclusion:
The court dismissed the writ petition, holding that the show cause notice issued under Section 18 of the Sales Tax Act was valid and that the processed meat products sold by the petitioner did not qualify for tax exemption under Item No. 4 of the Second Schedule. The court found no illegality or lack of jurisdiction in the issuance of the notice and upheld the reopening of the assessment.

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